Crude Oil

 The global oil markets have seen significant fluctuations in the past year, with demand driven down by a weak global economy and driven upward after natural disasters in India and Japan.

It is expected that world oil demand growth in 2013 will remain stable. However, weakness in the global economy is still causing a great deal of uncertainty for oil industry professionals worldwide.

NN and SS Ltd has a long history in examining and reporting on the global crude oil markets. Our experts in Dubai, London, Iran and across China provide market players with the latest pricing information for seven global regions, in-depth analysis on factors driving the price of crude, plus market reviews and outlooks.

Our crude oil market insights deliver all the information needed to stay on top of developments across global markets, for more confident trading and forecasting.

What is crude oil, and what is it used for?

Crude oil is pumped from the ground in the Middle East (e.g.,Iran , Saudi Arabian Arab Light), West Africa (e.g., Nigerian Bonny Light), the Americas, and Asia (Russia), pumped into ships called tankers, and sailed across the ocean to oil refineries on the Delaware River. Refining is the complex series of processes that manufactures finished petroleum products out of crude oil. While refining begins as simple distillation (by heating and separating), refiners must use more sophisticated additional processes and equipment in order to produce the mix of products that the market demands. Generally, this latter effort minimizes the production of heavier, lower value products (for example, residual fuel oil, used to power large ocean-going ships) in favor of middle distillates (jet fuel, kerosene, home heating oil and diesel fuel) and lighter, higher value products (liquid petroleum gases (LPG), naphtha, and gasoline).

Light Crude Oil

 Light crude oil is liquid petroleum that has a low density and flows freely at room temperature.^[1] It has a low viscosity, low specific gravity and high API gravity due to the presence of a high proportion of light hydrocarbon fractions.^[2] It generally has a low wax content. Light crude oil receives a higher price than heavy crude oil on commodity markets because it produces a higher percentage of gasoline and diesel fuel when converted into products by an oil refinery.

Light crude is composed of a high number of paraffins, which are straight and branched chain hydrocarbons that have a high hydrogen to carbon ratio. Essentially, they have two hydrogen atoms for every carbon atom they contain. Because hydrogen weighs roughly 12 times less than carbon, paraffins are lighter and less dense than hydrocarbons with a lower hydrogen to carbon ratio. The best light crudes contain roughly 60% paraffin.

Heavy Crude Oil

Heavy crude oil or extra heavy crude oil is oil that is highly viscous, and cannot easily flow to production wells under normal reservoir conditions.(Mai)^[1] It is referred to as "heavy" because its density or specific gravity is higher than that of light crude oil. Heavy crude oil has been defined as any liquid petroleum with an API gravity less than 20°.(Dusseault 2001)^[2] Physical properties that differ between heavy crude oils and lighter grades include higher viscosity and specific gravity, as well as heavier molecular composition. In 2010, the World Energy Council defined extra heavy oil as crude oil having a gravity of less than 10° and a reservoir viscosity of no more than 10 000 centipoises. When reservoir viscosity measurements are not available, extra-heavy oil is considered by the WEC to have a lower limit of 4° °API.(WEC 2007)^[3] (i.e. with density greater than 1000 kg/m³ or, equivalently, a specific gravity greater than 1 and a reservoir viscosity of no more than 10,000 centipoises.^[4][5] Heavy oils and asphalt are dense nonaqueous phase liquids (DNAPLs). They have a "low solubility and are with viscosity lower and density higher than water.(2003 & Llamas 118)^[6] "Large spills of DNAPL will quickly penetrate the full depth of the aquifer and accumulate on its bottom."(2008 & Vrba 23)^[7]

Heavy crude oil is closely related to natural bitumen from oil sands. Petroleum geologists categorize bitumen from oil sands as ‘extra-heavy oil’ due to its density of less than 10° °API.^[8] Bitumen is the heaviest, thickest form of petroleum.^[9] According to the U.S. Geological Survey, bitumen is further distinguished as extra-heavy oil with a higherviscosity (i.e., resistance to flow): “Natural bitumen, also called tar sands or oil sands, shares the attributes of heavy oil but is yet more dense and viscous. Natural bitumen is oil having a viscosity greater than 10,000 cP.”^[8] “Natural bitumen (often called tar sands or oil sands) and heavy oil differ from light oils by their high viscosity (resistance to flow) at reservoir temperatures, high density (low API gravity), and significant contents of nitrogen, oxygen, and sulfur compounds and heavy-metal contaminants. They resemble the residuum from the refining of light oil. Most heavy oil is found at the margins of geologic basins and is thought to be the residue of formerly light oil that has lost its light-molecular-weight components through degradation by bacteria, water-washing, and evaporation. Conventional heavy oil and bitumens differ in the degree by which they have been degraded from the original crude oil by bacteria and erosion.(Meyer & 2003 1) Often, bitumen is more viscous than cold molasses and does not flow at ambient conditions.^[9]

According to World Resources Institute, concentrations of remarkable quantities of heavy oil and oil sands are found in Canada and Venezuela.^[2][10] The U.S. Energy Information Administration (EIA) reported in 2001 that the largest reserves of heavy crude oil in the world were located north of the Orinoco river 270-mile long by 40-mile wide Orinoco Belt in eastern Venezuela. At that time Venezuela began authorizing "joint ventures to upgrade the extra-heavy crude resources." ^[11] Petroleos de Venezuela, S.A. (PDVSA) at that time estimated that there were 270 billion barrels of recoverable reserves in the area,^[11] the same amount as the conventional oil reserves of Saudi Arabia.^[12] The Orinoco Belt in Venezuela is sometimes described as oil sands, but these deposits are non-bituminous, falling instead into the category of heavy or extra-heavy oil due to their lower viscosity.^[13]Natural bitumen and extra-heavy oil differ in the degree by which they have been degraded from the original conventional oils by bacteria. According to the WEC, extra-heavy oil has "a gravity of less than 10° °API and a reservoir viscosity of no more than 10,000 centipoise".^[4] Thirty or more countries are known to have reserves.

Production, transportation, and refining of heavy crude oil present special challenges compared to light crude oil. Generally, a diluent is added at regular distances in a pipeline carrying heavy crude to facilitate its flow. Dilbit (diluted bitumen) is a means of transporting highly viscous hydrocarbon. Per the Alberta Oil Sands Bitumen Valuation Methodology, "Dilbit Blends" means "Blends made from heavy crudes and/or bitumens and a diluent usually condensate, for the purpose of meeting pipeline viscosity and density specifications, where the density of the diluent included in the blend is less than 800 kg/m3."^[14][15]

Mazut

Mazut is a heavy, low quality fuel oil, used in generating plants and similar applications. In the United States and Western Europe, mazut is blended or broken down, with the end product being diesel.

Mazut may be used for heating houses in the former USSR and in countries of the Far East that do not have the facilities to blend or break it down into more conventional petro-chemicals. In the West, furnaces that burn mazut are commonly called "waste oil" heaters or "waste oil" furnaces.

Mazut-100 is a fuel oil that is manufactured to GOST specifications, for example GOST 10585-75 (not active), GOST 10585-99 Oil fuel. Mazut. Specifications (active, last modified 07.01.2010) . (GOST is the Russian system of standards, much like ASTM, for example). Mazut is almost exclusively manufactured in the Russian Federation,Kazakhstan, Azerbaijan, and Turkmenistan. This product is typically used for larger boilers in producing steam since the BTU content is high. The most important consideration (not the only consideration) when grading this fuel is the sulfur content, which can mostly be affected by the source feedstock. For shipment purposes, this product is considered a ”dirty oil” product, and because viscosity drastically affect whether it is able to be pumped, shipping has unique requirements. Mazut is much like Number 6 Oil, and is part of the products left over after gasoline and lighter components are evaporated from the crude oil.

The main difference between the different types of Mazut-100 is the content of sulphur. The grades are represented by these sulfuric levels:

• ”Very Low Sulphur” is mazut with a sulphur content of 0.5%
• ”Low Sulphur” is a mazut with a sulphur content of 0.5-1.0%
• ”Normal Sulphur” is a mazut with a sulphur content of 1.0-2.0%
• ”High Sulphur” is a mazut with a sulphur content of 2.0-3.5%

Very Low Sulfur mazut is generally made from the lowest sulfur crude feedstocks. It has a very limited volume to be exported because:

• The number of producers in Russia are limited. Refineries which produce this are generally the largest of oil companies, such as Lukoil and Rosneft, etc.
• A minimum of half of the total volume is sold only to the domestic market in Russia and the CIS.
• Most of the remainder of this specific product are reserved by state quotas for state controlled companies abroad.
• The remaining volumes available for export are sold according to state quotas, via state auctions, accessible only to Russian domestic companies with special access and experience with these auctions.

Low to high sulfur mazut is available from Russia and other CIS countries (Kazakhstan, Azerbaijan, Turkmenistan). The technical specifications are represented in the same way, according to the Russian GOST standard 10585-99. The Russian origin mazut demands higher prices.

Bitumen/Asphalt

 

Natural asphalt/bitumen from theDead Sea

 

refined asphalt/bitumen

 

The University of Queenslandpitch drop experiment, demonstrating the viscosity of asphalt/bitumen

Asphalt (US ⁱ/ˈæsfɔːlt/ or UK /ˈæsfælt/,^[1][2] occasionally /ˈæʃfɔːlt/), also known as bitumen (/bɪˈtjuːmən, baɪ-/),^[3][4] is a sticky, black and highly viscous liquid or semi-solid form of petroleum. It may be found in natural deposits or may be a refined product; it is a substance classed as a pitch. Until the 20th century, the term asphaltum was also used.^[5] The word is derived from the Greek 'asphaltos' which in turn was borrowed from an Eastern word. ^[6]

The primary use (70%) of asphalt/bitumen is in road construction, where it is used as the glue or binder mixed with aggregate particles to create asphalt concrete. Its other main uses are for bituminous waterproofing products, including production of roofing felt and for sealing flat roofs.^[7]

The terms asphalt and bitumen are often used interchangeably to mean both natural and manufactured forms of the substance. InAmerican English, asphalt (or asphalt cement) is the carefully refined residue from the distillation process of selected crude oils. Outside the United States, the product is often called bitumen. Geological terminology often prefers the term bitumen. Common usage often refers to various forms of asphalt/bitumen as "tar", such as at the La Brea Tar Pits. Another archaic term for asphalt/bitumen is "pitch".

Naturally occurring asphalt/bitumen is sometimes specified by the term "crude bitumen". Its viscosity is similar to that of cold molasses^[8][9]while the material obtained from the fractional distillation of crude oil boiling at 525 °C (977 °F) is sometimes referred to as "refined bitumen".

D2/Gas Oil

 D2 is a refinery abbreviation for Gasoil. It is the second distillate from the crude, and can be used without reformers and additives. So, the first engines used D2 as fuel - before petrol cars as we know them today was invented. That is because the engine invented by a German called Diesel, requires no spark plugs. The diesel engine will ignite and combust when the pressure increases so that the heated "plug" makes it explode. Here we get the name "Diesel" - since the same principles are used in diesel engines today. However, automotive diesel that you fill has additives that the refinery will add to make the engine more efficient and also easier to start in the winter. if you read the small print, you will see that diesel changes "flash point" in the winter. It also has additives to absorb water that condense as you have it in your car (same as petrol) - but since the diesel is injected right into the cylinder, the ice will destroy the nozzles long before the engine. If you use summer diesel in the winter, you will get better mileage, but your fuel pipes may freeze and can also burst, and the wax makes the diesel flow thicker.

The principal differentiators in GASOIL or D2 is the content of sulphur. Just 10 years ago, the US EPA introduced a limit of 4% sulphur in the GASOIL, whereas Europe and the rest of the world followed later. As in most other cases, when you first have to remove the sulphur, it was soon discovered ways of doing this more efficient. Then it was discovered that the sulphur, as sulphuric acid, could be traded with a good profit - which now is the motivator for extracting as much as possible. Well, pour this over limestone, and you get cement and add to it other chemicals, and you can get cement that are more valuable than the Gasoil / D2.

So "Low sulphur Gasoil" is no longer 4 percent - but below 0.2 percent. Then we have a new, "Ultra Low Sulphur" at 0.02% at the most, and the limit here is (a) that mass spectographs requires extensive calibration to measure below 1000ppm, and (b) sulphur has a way to form clogs - the molecules binds to free hydrogen molecules and form a cluster of molecules that will break if "cracked" by the refinery, but as explained above, D2 is a distillate and has not been "cracked". So - take a pint of ULSG, you may have the misfortune of having 0.1 percent sulphur - but the average for a barrel will be less then 0.02 - its just you managed to get a cluster of molecules.

D1

 D1 is road use approved kerosene (K1 clear)

JP54

Jet fuel or aviation turbine fuel (ATF) is a type of aviation fuel designed for use in aircraft powered by gas-turbine engines. It is colourless to straw-colored in appearance. The most commonly used fuels for commercial aviation are Jet A and Jet A-1, which are produced to a standardized international specification. The only other jet fuel commonly used in civilian turbine-engine powered aviation is Jet B, which is used for its enhanced cold-weather performance.

Jet fuel is a mixture of a large number of different hydrocarbons. The range of their sizes (molecular weights or carbon numbers) is restricted by the requirements for the product, for example, the freezing point or smoke point. Kerosene-type jet fuel (including Jet A and Jet A-1) has a carbon number distribution between about 8 and 16 (carbon atoms per molecule); wide-cut or naphtha-type jet fuel (including Jet B), between about 5 and 15.^[1]